Towards Compassionate Total Rewards: COVID-19’s Clarion Call for a Paradigmatic Shift

Abstract

The COVID-19 ‘new normal’ has forced organisations to reinvent business practices including rewards in order to retain and motivate employees. This article reviewed the published literature to identify the changing Total Rewards strategies adopted by firms in India as they navigated the various phases of this unprecedented pandemic. The review of academic papers as well as practitioner articles or news articles on relevant themes published in the period of 2020–2021 was followed by semi-structured interviews with 12 human resource practitioners working in the Compensation and Benefits or Total Rewards function across various organisations in India to arrive at the findings of the study. The study revealed that most firms have adopted a compassionate approach while reformulating their Total Rewards strategy. Agility, fairness and hyper-personalisation form the cornerstones for relooking at the Total Rewards dimensions such as pay, benefits, learning and development, and work environment. Spurred by the pandemic, the article highlights the endeavour of Indian firms to imbibe compassion into their Total Rewards strategies by being agile, fair and hyper-personalised. Further, it also lists potential challenges that Indian reward leaders might need to address to successfully implement and sustain a compassionate Total Rewards culture in their organisations.

Keywords

Agile compassion COVID-19 hyper-personalisation Indian context total rewards

Introduction

‘From being cash-based and tangibles to experience-based and intangibles’, says Mr Kartikey Singh, Associate Client Partner, Korn Ferry, when asked about the future of rewards. Janani Ravishankar, Compensation & Benefits (C&B) Head, Cleartrip, adds on to this by stressing the need to integrate human emotions into the rewards strategy in order to retain and motivate employees. To quote her, ‘Gone are those days when C&B was perceived as a numeric function with little emotions attached to it’. This shifts the needle from the traditional C&B concept to Total Rewards that embraces everything that the employees value at work and encompasses the entire ‘employee value proposition’. Kantor and Kao (2004) and O’Neal (1998) divide Total Rewards into four broad dimensions, namely, pay, benefits, learning and development, and work environment. The concept of Total Rewards has received considerable attention in the literature of human resource (HR) management practices in the recent past (Fischer et al., 2003; Kantor & Kao, 2004; Kaplan, 2005; Rumpel & Medcof, 2006). It has assumed more salience than ever in the post-pandemic world that has left employees in a state of anxiety and distress. Employee expectations have seen a sea of changes with the need for a physically and psychologically safe workplace being very important (Sahoo & Pattnaik, 2021). Further, crisis situations such as COVID-19 pandemic-induced ‘compassion fatigue,’ where people are left with little compassion to offer due to continuous exposure to bad news over a period of time. This is the time when employees are in need of more compassion than ever from their employers. Thus, employee value proposition needs to be aligned to emerging employee needs and expectations by through a suitable compassionate Total Rewards strategy.

McKinsey refers to COVID-19 as a ‘landscape-scale’ crisis that has accelerated change to an unimaginable extent. Mr Anirban Gupta, Director Rewards at Aon Hewitt, predicts that the post-COVID workplace will never be the same again (Sharma, 2020). In this backdrop, consulting giants such as WorldatWork or Aon Hewitt have been stressing on compassion as the only key to endure the new normal. The Deloitte Human Capital 2020 report [13] states that 69% of organisations globally accept the need for change in C&B strategies towards more caring for employee needs. Organisations in India have adopted various practices across all the four Total Rewards dimensions that reflect their endeavour in moving towards a more compassionate Total Rewards strategy by trying to cater to the economic, social, emotional and physical needs of their employees.

Research Methodology

The first phase of the study comprised a review of papers published in academic journals as well as articles published in practitioner journals and newspapers on Total Rewards during the period of 2020–2021 while the pandemic raged. The reliance on practitioner journals and newspaper articles was necessary to capture the practices prevalent in the times due to limited academic articles on the topic during this period. Articles or papers with keywords that resonated with Total Rewards or any of the four individual dimensions of total rewards were reviewed for the study. In the beginning, databases such as EBSCO, Science Direct and JSTOR were searched. This was supplemented later by a search over popular search engines. Key words such as ‘Total Rewards’, ‘Rewards’, ‘Employee Value Proposition’, ‘Compensation’, ‘Pay’, ‘Benefits’, ‘Learning and Development’, ‘Workplace’, ‘Work Environment’, were used to select papers and articles for the purpose of review. While the authors reviewed around 45 papers and articles, content from 34 of them were found useful to be included in this study.

In the second phase, the authors tele-interviewed 12 HR practitioners working in the C & B or Total Rewards function across various organisations in India to understand the post-COVID-19 reward decisions in their respective organisations. Snowball sampling was used to choose the interviewees. A semi-structured interview schedule was used, the average duration of which was around 22 minutes. Eight of the HR practitioners were females and four were males. Their average age was 38 years with an average experience of around 12 years. The names of the HR personnel and their organisations have not been mentioned explicitly to adhere to confidentiality norms. The HR officers were asked to describe what aspects of Total Rewards have gained focus in the pandemic period and to describe major trends that have emerged across the four dimensions of Total Rewards in their respective organisations.

The learnings from both phases were compared and married to arrive at the final findings of the study.

Findings and Discussion

First, the authors individually conducted a thematic keyword analysis of the respondents’ verbatim comments gathered during the semi-structured interviews. Next, they collated their findings from the analysis to converge on the themes emerging from the interviews as presented in Table 1. It was found that organisations operating in India have based their Total Rewards decisions on three major themes—fairness, agility and hyper-Personalisation, as they tried to be compassionate and empathetic during the raging pandemic.

In the next step, the authors analysed organisational practices gathered from the literature review as well as the interview responses to understand Total Rewards trends in the pandemic era. These emerging trends across four dimensions of Total Rewards were then clustered under the three themes identified in the first phase of analysis. This analysis is presented in Table 2.

Potential Challenges in Implementing the compassionate Total Rewards strategy

Organisations must foresee certain challenges linked with compassionate Total Rewards decisions in order to implement them successfully. First, fairness and empathy must be balanced with the economic viability of the firms. How does the sense of equity and fairness change when we have giggers compared to employees on payroll? How does an organisation remodel its Total Rewards strategy to be inclusive of giggers or contractual employees who are not a part of the organisational payroll? Second, if not managed properly, agility could lead to chaos. Hence, do organisations have the necessary artificial intelligence and analytics-driven systems to manage such agility? Complex statistical analysis such as scenario analysis, what-if-analysis, conjoint analysis or simulations might be needed to assess the cost-benefit and showcase the return on investment of any total rewards decision that the organisation takes. Third, do employees always know what’s best for them for hyper-personalisation to be a success? Who would own the consequences of a bad decision taken by an employee, the organisation or the employee? How many times can an employee be given a chance to retract on his or her own decision? Can the organisation then leave the employee to suffer the consequence of a bad decision and yet be called to have a compassionate rewards strategy? Do organisations know if an internal-focused, market-driven or skill-based approach would fit them the best because when it comes to rewards, there is no best practice, rather just a best fit? What works for one organisation might be a complete failure for another organisation, even in the same industry, depending on organisational culture, management philosophy and organisational maturity (Milkovich et al., 1996). An insight into such aspects is a must for the successful implementation of compassionate Total Rewards strategy. Hence, while organisations strategise to be compassionate through rewards, they must also build the linking mechanisms and support systems for sustaining such strategy and reap the benefits from it.

Table 1.

Themes Emerging from Thematic Keyword Analysis of Interview Responses.

Verbatim Comments from Respondents	Keywords	Emerging Themes
‘Employees needed compassion and justice more than ever now. Total Rewards strategy needed to account for this’.	Compassion, justice	Fairness
‘Initial pandemic days were chaotic. But we never lost focus on pay fairness. Keeping employees whole by cushioning against inflation was crucial at this point’.	Pay fairness keeping employees whole
‘Hikes got deferred in the initial pandemic phase. However, we bounced back with double hikes. Reinstating employee belief in the organisational fairness was important at this point of time’.	Reinstating employee belief, organisational fairness
‘Frontline staff braved the pandemic to keep service running. Introducing special incentives or insurance schemes was needed for pay equity’.	Pay equity
‘We used our organisational network to ease access to COVID hospitals for our employees and their families. This reinstated employee trust in the organisational compassion and fairness’.	Employee trust, compassion, fairness
‘Adhering to standardised protocols for ensuring a sanitised workplace or adopting a hybrid work model to ensure employee health and safety was the foremost priority’.	Adhering to standardised protocols, safety
‘The pandemic has induced such dynamism into workplaces that rigid reward policies cannot yield any results. Flex-policies are the need of the hour’.	dynamism, non-rigid, flex-policies	Agility
‘Policies are for employees. Employees are not for policies. Tweaking a policy to meet employee needs just shows compassion and empathy at these difficult times’.	Tweaking policies as per employee needs, empathy
‘Policies need to be more agile than ever now in order to cater to changing employee and business needs’.	Agile
‘It’s time to get used to a boundary-less and flexible work-setting now. Employee can work from anywhere as long as he or she is delivering’.	Boundary-less, flexible
‘Loosening Leave policies during pandemic was the least that organisations could do show empathy’.	Loosening leave policies, empathy
‘Every employee is unique and so are their needs. There is no one-size-fits-all approach for designing Rewards’.	Unique, no ‘one-size-fits-all’ approach	Hyper-personalisation
‘Rewards Leaders have to be smart to tailor a policy in such a way that it caters to the needs of a diverse workforce’.	Tailor policies as per the changing needs, diverse
‘Employees value benefits differently. There comes in the role of Flexible benefits that allows employee the choice to personalise their benefits package to certain extent’.	Value benefits differently, allow employee choice, personalise
‘Return to work strategy has to consider individual needs, preferences, and constraints of employees. We have to take a customised approach here’.	Individual needs, customised approach
‘Can we map the individual aspirations of employees to our business strategy? That itself is perceived as a big reward by the employees’.	Individual aspirations
‘Personalising career growth is an important aspect of Total Rewards’.	Personalising career growth

Source: Authors’ own analysis of interview responses.

Table 2.

TR Practices Adopted During Pandemic by Organisations in India.

Underlying Principles	Re-strategising Pay
Fairness	Keeping employees ‘whole’ by providing a salary hike in response to inflation rates in order to keep purchasing power intact during the initial days of pandemic. For example, Accenture. Continuing with hikes and promotions as per plan to keep employee morale high even during pandemic times. For example, Myntra, Flipkart, Capgemini and ICICI bank.¹ Double hikes in a year to make-up for deferred hikes during the initial pandemic phase. For example, Infosys, HCL, Tech Mahindra and Wipro.² Frontline bonuses for their sales staff that braced the deadly infection to be present at the site, serving customers. For example, Amazon, Walmart and Starbucks.³ Additional COVID Hazard Grants for employees. For example, Starbucks.⁴ Unilever refused to do business with any firm that does not pay at least a living wage or income to its staff by 2030 in its mission to ensure equitable pay for all.⁵
Agility	18% Indian organisations were flexible enough to provide incentives as per adjusted targets as the pandemic hit economy started nose-diving.^6. PepsiCo allowed 12 weeks leaves at two-third pay for employees who were unable to attend work as their kids were home as schools and creches closed overnight due to the pandemic.⁷ Accenture rolled out a ‘Thank you Bonus’ equivalent to one week’s base salary for its employees for their support during difficult times.⁸ Using agile metrics such as Diversity, Equity and Inclusion (DEI) metrics for deciding CEO pay. For example, Apple, McDonald’s, Google, Uber, Microsoft, Intel and First Energy Ltd.⁹ Moving towards less riskier options such as Restricted Stock Units (RSUs) instead of stock options. For example, Tesla, Apple, Amazon, Google, Tesla and SpaceX.¹⁰
Hyper-personalisation	Introducing the concept of Flex Pay that allows employee flexibility to choose between types of pay—Pay-for-retention, Pay-for-development, or Pay-for-performance. While the former two would have lower risk pay mix (say 75 fixed–25 variable), the latter might have higher-risk pay mix (say 90 fixed – 10 variable).¹¹ For example, Tech Mahindra has introduced retention bonus for key talent, skill-based allowances for niche skills and project-based bonuses for critical projects.¹²
Underlying Principles	Relooking at Benefits
Fairness	62% organisations revised health insurance schemes to cover COVID expenses.¹³ For example, BNY Mellon and Schneider. Special health insurance for frontline staff. For example, Nestle, Godrej and Dabur.¹⁴ 86% organisations started tele-medicine and tele-counselling facilities.¹³ For example Air Asia, Capgemini, BNY Mellon and PwC. Emergency COVID Relief Funds even for part-time employees. For example, Amazon.¹⁵ Free COVID testing and health check-up every alternate week for employees. For example, Weikfield; Free vaccination drives for employees. For example, TCS. Allowances for setting up home workspace. For example, Google and Shopify.¹⁶ Others like Ansys tie up with third parties such as Amazon or Pepperfry to provide discounts to employees on buying on homework-space equipment.
Agility	50% Indian organisations loosened leave policies.⁶ For example, PwC announced COVID-related leaves taken for self or family would not be deducted from normal leave balance. Schneider added five days care leaves to employee leave balance and later extended it by another five days as the pandemic continued raging. Amazon introduced COVID-vaccine leaves where an employee could take leaves for vaccine administration and deal with post-vaccine symptoms, if any. Using company network across India for hassle free COVID detection and treatment of employees. For example, PwC and Schneider Organisations launch child and dependent care employee assistance programs. For example, Accenture, Dell Technologies, Intel, KPMG and BNY Mellon.^17,26 Jaipur based IT firm provided Netflix leave to watch money heist season 5 to cheer up employees in distressed times.¹⁸ BNY Mellon launched ‘It’s OK’ campaign and aligned it with World Mental Health Day to remind employees that it’s ok to take time to care for themselves and others.²⁶
Hyper-personalisation	Air Asia institutionalised peer-to-peer counselling so that employees speak to people they are comfortable with.²⁵ BNY Mellon launched a digital stress management program that provided a daily Cup of Calm, breathe activity and other personalised tips for managing day-to-day anxiety for its employees.^26. Schneider revised its existing health insurance scheme to suit the needs of a multi-generational workforce. The young graduate engineer trainees (GETs) could now insure only self under the health insurance instead of insuring family and get the cash amount saved on the premium as less members were insured under the scheme. They could then spend that cash in buying a gym membership or taking a vacation. Most firms have adopted flexible benefits plan where employees have a choice to choose benefits that add most value to them. For example, Infosys, Accenture, PwC and CTS. Considering employee demographics, medical conditions, workstyles and preferences while planning their return to work. For example, Telekom Malaysia used employee ‘Thick data’ to cluster employees into high, medium and low risk categories. Return to work decisions were customised to the needs of employees in each category and it was not a ‘one-size-fits-all’ approach. Ansys conducted an employee pulse survey across all global locations to understand employee preferences and concerns while, returning to work. Introducing Benefits for Performance, where a high performer might be entitled to a longer paid vacation or a reduced workweek or might secure a special party invitation with the top leaders when compared to average performers.¹²
Underlying Principles	Redefining Learning & Development
Fairness	39% organisations rewards team leaders for team skill development.⁶ For example, IBM
Agility	34% organisations have implemented Skill based pay after identifying hot skills or niche skills.⁶ For example, Tech Mahindra.¹²
Hyper-personalisation	Codaemon, a mid-sized Pune-based IT firm let go of old clients after an employee opinion survey where employees expressed their interest to work on newer technologies for their career development and raised their grievance that the older clients were not using these newer technologies.
Underlying Principles	Work Environment
Fairness	74% organisations highlight the need for transparent reward communication to ensure procedural justice to employees.⁶ Ensuring safe and sanitised workplace to employees becomes the utmost priority. Most companies adopt the ‘hybrid work’ model. For example, TCS adopts a 25 × 25 Model as per which by 2025 only 25% of its workforce would need to work out of office at any given point of time and employees would not have to spend more than 25% of their work time at office.¹⁹ Google has declared that 60% of its employees will spend a few days per week at office whereas 20% will work from new office locations. The rest 20% employees will be allowed permanent work-from-home. Google also declared that compensation of employees will be re-adjusted as per their decision of transferring to a new location or continuing with the remote working model.²⁰
Agility	Organisations adopt a ‘work from anywhere’ policy. For example, Nagarro and Think Talent.²¹ Organisations such as Facebook, Twitter, Spotify and Salesforce have asked employees to work-from-home forever if they wished to do so.^22,23 Virtual parties and employee engagement activities by organisations. For example, companies such as Codaemon, PwC or Ansys send employees Swiggy or Zomato vouchers to buy food and then join an informal chit-chat session with team mates virtually along with the munchies and drinks.
Hyper-personalisation	Mumbai based cybersecurity firm TAC security shifts to a four-day work week to suit employee convenience.²⁴ PwC introduces various flexi-work policies such as flexible Fridays wherein employee can take a Friday off after completing a 40-day work week or reduced work week concept at reduced pay. An employee could also opt to work four days or three days out of office and the rest of the days from home after discussion with their respective people manager. Employees also have the option of reducing their workweek and get paid on a pro-rata basis as per days worked.

Source: Authors’ analysis of available literature and interview responses on Total Rewards in the COVID times.

Notes: ¹https://economictimes.indiatimes.com/jobs/the-companies-giving-out-pay-raises-during-covid/capgemini/slideshow/76087984.cms, retrieved 15 February 2022

²https://timesofindia.indiatimes.com/business/india-business/after-delays-it-companies-give-double-hikes/articleshow/82565109.cms, retrieved 15 February 2022

³https://www.vox.com/the-goods/22280335/front-line-workers-essential-companies-pay-vaccine, retrieved 15 February 2022

⁴stories.starbucks.com/press/2020/navigating-through-covid-19/, retrieved 15 February 2022

⁵https://www.bbc.com/news/business-55735108, retrieved 15 February 2022

⁶https://www.asean.mercer.com/events/webcasts/navigating-total-rewards-through-covid-19.html, retrieved 11 November 2021

⁷https://www.pepsico.com/news/story/covid-19, retrieved 15 February 2022

⁸http://theoutreach.in/accenture-pwc-and-kpmg-gives-a-thank-you-bonus/#:~:text=Technology%20consultancy%20Accenture%20last%20week,under%202%25%20of%20annual%20salary, retrieved 15 February 2022

⁹https://fortune.com/2021/04/06/corporate-diversity-and-inclusion-linked-to-ceo-pay-nike-apple-mcdonalds-chipotle-google-uber-microsoft-intel-firstenergy/, retrieved 15 February 2022

¹⁰https://www.upstock.io/post/restricted-stock-options-the-best-employee-equity, retrieved 15 February 2022

¹¹https://www.peoplematters.in/article/benefits-and-rewards/a-winning-rewards-strategy-that-fits-all-cases-does-not-exist-24431, retrieved 15 February 2022

¹²https://www.peoplemattersglobal.com/article/strategic-hr/re-creating-the-work-place-magic-through-personalized-employee-experiences-32542, retrieved 15 February 2022

¹³https://www2.deloitte.com/cn/en/pages/human-capital/articles/global-human-capital-trends-2020.html, retrieved 11 November 2021

¹⁴https://economictimes.indiatimes.com/industry/cons-products/fmcg/virus-fmcg-companies-launch-special-insurance-schemes-for-frontline-workers/articleshow/75409232.cms?from=mdr, retrieved 15 February 2022

¹⁵https://blog.aboutamazon.co.uk/amazons-actions-to-help-employees-communities-and-customers-affected-by-covid-19, retrieved 15 February 2022

¹⁶https://www.theglobeandmail.com/business/careers/article-work-from-home-office-setup-stipends-are-on-the-rise-as-remote-working/, retrieved 15 February 2022

¹⁷https://www.flexjobs.com/blog/post/flexible-companies-offering-childcare-assistance/, retrieved 15 February 2022

¹⁸https://economictimes.indiatimes.com/magazines/panache/jaipur-based-it-firm-declares-netflix-chill-holiday-for-money-heist-s5-drop-says-important-to-relax/articleshow/85798084.cms, retrieved 15 February 2022

¹⁹https://www.india.com/business/tcs-work-from-home-latest-news-today-tcs-announces-25-25-model-says-employees-will-spend-only-25-of-time-in-office-by-2025-5097704/, retrieved 15 February 2022

²⁰https://www.businessinsider.in/careers/news/google-adopts-hybrid-workplace-60-of-employees-to-work-from-office-20-to-work-in-new-locations-and-rest-20-to-work-from-home/articleshow/82424907.cms#:~:text=As%20the%20Covid%2D19%20pandemic,new%20office%20locations%20and%2020, retrieved 15 February 2022

²¹https://www.nagarro.com/wfh#:~:text=Work%20from%20home.,across%20different%20cities%20and%20countries, retrieved 15 February 2022

²²https://www.businessinsider.in/careers/news/the-great-divide-business-leaders-are-split-on-long-term-remote-working-this-is-what-spotify-twitter-goldman-sachs-and-others-have-announced-so-far-/articleshow/81380073.cms, retrieved 15 February 2022

²³https://www.hindustantimes.com/world-news/facebook-offers-permanent-work-from-home-for-employees-even-as-offices-reopen-101623303929754.html#:~:text=Beginning%20on%20June%2015%2C%20Facebook,to%20its%20remote%20work%20policy, retrieved 15 February 2022

²⁴https://www.hindustantimes.com/business/cybersecurity-firm-in-india-shifts-to-4-day-working-week-01632747250961.html#:~:text=A%20cybersecurity%20company%20has%20shifted,will%20make%20the%20policy%20permanent, retrieved 15 February 2022

²⁵https://www.hrkatha.com/practice/peer-to-peer-support-helped-air-asia-india-take-flight-in-the-new-normal/, retrieved 15 February 2022

²⁶https://www.bnymellon.com/us/en/about-us/esg-and-responsible-investment/enterprisesg/caring-for-our-people.html, retrieved 15 February 2022

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

ORCID iD

Subhra Pattnaik

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